This Morning: RIMM Rising, Verizon, Apple Ride the iPhone

By Tiernan Ray

Here are some things going on this morning in your world of tech:

Shares of Research in Motion (RIMM) are up $1.53, or almost 10%, at $17.37, after a roughly 13% jump in the ordinary shares traded in Toronto yesterday, following remarks by CEO Thorsten Heins in an interview with Germany’s Die Welt that suggested possible exit strategies for the BlackBerry maker. As ThinkDigit’s Vishal Mathurrelates, Heins’s remarks seemed to imply the company would be willing to license its forthcoming BB10 software to another hardware maker, or perhaps exit the hardware business. However, as related yesterday by Reuters’s Euan Rocha, RIM officials were quick to declare that Heins’s comments are no different from those he has made in prior appearances, saying that a variety of options are always on the table for the company.

RIM is to unveil BB10, its effort to reinvigorate the BlackBerry, at an event in New York on January 30th, a week from Wednesday.

Also, in case you missed it, see Matt Hartley‘s run-down of Heins’s first year over at the Financial Post. Amidst the positive news, the stock got one upgrade this morning, from Scotia Capital‘s Gus Papageorgiou, to Sector Outperform from Sector Perform, while also getting a downgrade by Paradigm Capital’s Barry Richards to Hold from “Speculative Buy.”

Shares of Verizon Communications (VZ) are up 27 cents, or 0.6%, at $42.81 after the company this morning reported higher-than-expected activations of Apple‘s (AAPL) iPhone in the December quarter, helping to boost total company revenue to $30.05 billion, better than the expected $29.78 billion, but also depressing profit, which came in at 38 cents a share versus the expected 51 cents.

Verizon said during its conference call with analysts following the release that it activated “about 6.2 million” of the iPhone “and almost half were 4G LTE,” referring to “long term evolution,” the higher broadband wireless networking standard found on the iPhone 5.

Analysts this morning are taking the activations as evidence that Apple met expectations for iPhone sales in the quarter. Will Power with R.W. Baird thinks the Verizon number indicates 48.5 million iPhone units, while Amit Daryanani of RBC Capital thinks it means more like 46 million-plus.

Apple shares this morning are up $2.97, or 0.6%, at $502.77. The company reports December-quarter results tomorrow, January 23rd, after markets close.

In other Apple news, DigiTimes’s Siu Han and Alex Wolfgramthis morning follow-up on rumors that Apple is going for not one but two new iPhone models this year, both likely to be of the 4-inch-screen variety, citing multiple unnamed sources. One of the models supposedly is for a lower price range. A third model with a bigger screen than that is in development but won’t be out this year, the sources tell the authors.

Shares of Google (GOOG) are down $5.16, or 0.8%, at $699.35, and its tempting to think Facebook‘s (FB) announcement last week of its “graph search” feature is weighing on shares. However, Stifel Nicolaus’s Jordan Rohan, who has a Hold rating on the shares, offers some more prosaic thoughts this morning, warning that results for the December quarter, which Google will report later today, may have been weighed down by the expense of both its owned “Nexus” and “Chrome” hardware products, and by the fact lower-priced ads for mobile devices probably made up 20% of its total ad revenue in the quarter.

Shares of Dell (DELL) continue to rise on LBO speculation, currently up 10 cents, or 0.7%, at $12.94,. Bloomberg’s Serena Saitto and Jeffrey McCrackenyesterday reported that the company had hired boutique firm Evercore Partners to pursue to field offers, perhaps anticipating lawsuits in the event a deal is announced. My colleague Andrew Bary over the weekend wrote a piece on the matter, entitled “How to Give Dell’s Shareholders a Fair Deal,” that rumored deal prices in the range of $13 to $14 per share for Dell are already seen by some longtime investors as essentially taking advantage of the stock for the benefit of CEO Michael Dell and private equity, at the expense of ordinary investors.

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JANUARY 22, 2013 10:13 A.M.

Bill wrote:

Jony Ives will replace Tim Cook as Apple CEO next month. Cook is out of his league and has ruined Apple.

JANUARY 22, 2013 10:22 A.M.

Jake_in_Seoul wrote:

@Bill Do you mean Jonathan Ive? Right, as if he wants to spend all his time deal making and managing the Asian supply chain!

And as for Tim Cook having "ruined Apple", why not wait a day and see the numbers. The Verizon sales data must be scaring quite a few shorts.

JANUARY 22, 2013 10:34 A.M.

Bill wrote:

@Jake: Doesn't matter what the earnings are: Good, Bad, Indifferent, Apple stock isn't going anywhere but down and Cook will be fired. Damage is done. Apple could have blow out earnings and it won't matter anymore. Cook has set the company and shareholders up for failure and Wall Street will make sure of that Wed night.

JANUARY 22, 2013 10:36 A.M.

freddysrevng wrote:

Apple down for months.... RIMM continues to soar...... Get smart....

ENTER BB 10 ......

JANUARY 22, 2013 10:37 A.M.

freddysrevng wrote:

Cookie should have never had that picture taken at the slave camp aka Foxconn with that goofy looking hat on .... it has been "downhill" for Apple since that moment...

Coincidence? I don't think so...

ENTER BB 10 .....

JANUARY 22, 2013 11:26 A.M.

Joe wrote:

Apple sees 425 post earnings, and Tim Cook will be fired by the Board.

JANUARY 22, 2013 11:38 A.M.

George wrote:

The real question is where will the MIFI fit in.. Fast becoming the standard for rural net access. NVTL will be the play,

JANUARY 22, 2013 11:54 A.M.

StonehamMel wrote:

Bill: Let's look at what you wrote:

"Apple stock isn’t going anywhere but down and Cook will be fired. Damage is done. Apple could have blow out earnings and it won’t matter anymore. Cook has set the company and shareholders up for failure and Wall Street will make sure of that Wed night."

Apple has never managed its stock price; no sound company does. Only the fact that it's almost embarrassingly cash-rich led to a dividend.

Damage to the stock price had nothing to do with Cook, except maybe he should have fired Scott as soon as Steve died. Apparently, he'd been a burr under the saddle and stayed only because he exploited Steve's loyalty. The stock has been battered by rumors to which no CEO can respond since the institution of Reg FD.

Apple stock had been driven up by a combination of fund purchases - NONE of which have been dumping shares - and retail investors, none of whom have been active for months. Result: traders and rumors drive the market. Precisely what could any CEO do in response? - certainly not say a word.

Note that none of the reputable investment houses have done more than trim to rational their forecasts - not because of any fundamental weaknesses in the company or its market position, but because they recognize how, when the funds are stuffed with it, and there is no retail action, the worst forces in the market can hammer stock price.

Apple is stronger today than when Steve was at the helm. Shorter product cycles and resulting demand show Cook's changes are working - and responding to the market potential, globally. Apple announced it will open a store in Indonesia this year - one of Blackberry's last bastions. Industrial and academic sales of the iPad 4 will show that platform has plenty of running room along side the Mini.

Don't mix your anger at stock price with management skills. CEOs are paid to run the company, not share price. Don't like it? - sell and buy JNJ.

JANUARY 22, 2013 12:11 P.M.

Bill wrote:

@Mel: good points but none matter. What
matters is the stock sits at a pathetic 497. That
is disgraceful given the company was at 700
4 months ago. Cook is responsible for the
decline. Enough said. He had all the tools
to fix, he turned his back.

Suppose you got a call from the Apple board that they saw your post and wanted to interview you for Cook's position.

They would ask you to give them five concrete steps you would take to reverse the slide in Apple stock. They will want specifics - not generalities.

What would you tell them?

JANUARY 22, 2013 1:38 P.M.

Anonymous wrote:

Mel. I think Bill is obsessive compulsive. If not. Something is written all over him. That's why we give our employees T-Shirts.

JANUARY 22, 2013 2:11 P.M.

Bill wrote:

Ride the Iphone right into the grave!

JANUARY 22, 2013 2:23 P.M.

Bill wrote:

@ Mel: Easy my friend: I'm going to give you 7 how's that?

1. Fire the entire IR/PR Departments and replace with real IR/PR Heads who know how to market and splash and really understand Relations.

2. Stop the Dividend now. It is a complete waste of shareholder/company money. I say screw all these value funds who said they wanted it. You want Apple, but the stock.

3. At this level, stop wasting time. Announce a $50B buyback now. Put your money where your mouth is and where the company is going.

4. Announce a 20 to 1 stock split and now. Don't wait. You want to increase shareholder value, watch. Do the split, it doubles in 1 month.

5. Sign a deal with China Mobile now and take less on the payment.

6. Give the 3rd world countries a cheaper Iphone and F the margins. Don't listen to WS and just do it.

7. Stop giving Apple Management and Board stock options like candy. Align to their performance and stock price. Stock goes up, they get rewared. Stock goes down, they don't. Stop handing out millions just becuase they stayed on board for 5 years.

No, I don't want the CEO job. I'm too busy!

JANUARY 22, 2013 2:32 P.M.

StonehamMel wrote:

@Anonymous - you're probably right. For several years, I took investor calls at a NASDAQ specialty pharma. It was a thankless job. Many had bought the stock based on irrational expectations, some stoked by unethical brokers. Many sat on the Yahoo message board, gathering questions to fire at me, with preconceived rebuttals to the most reasoned explanations of why I could not comment, and why I couldn't give them a hint as to the results of clinical trials. Finally, I just put a message on the line asking for emails - all of which got explanations of RegFD for responses, and links to SEC documents and press releases on the company web site.

I remember an elderly dentist on Long Island who had sunk all his retirement savings into the stock, on the guidance of a crazy broker, and it was trading well below his purchase price, and steadily going downhill. He could not retire as a result. I felt terrible for him. He was never abusive, just sad.

Older shareholders who've been trading since before Reg FD and before Sarbanes Oaxley have a hard time understanding that it's not 1993 any more. Just about all a company can do today is buy back shares to try to increase the stock price - or begin paying dividends - neither of which I would have done if I was Tim Cook. I always considered that a terrible idea for companies that had technology and market advantage, like Apple.

JANUARY 22, 2013 2:41 P.M.

Al wrote:

@Bill: I could not agree with you more. What
will it take to get you to run Apple? I'm all
ears and waiting for you to call me. Best plan
I have seen on Apple in 2 years and I don't
even know you! Call me. Al Gore.

JANUARY 22, 2013 2:50 P.M.

StonehamMel wrote:

@Bill:

Good response!

1. Fire the entire IR/PR Departments and replace with real IR/PR Heads who know how to market and splash and really understand Relations.

[Apple gets more IR/PR than any company in the world. What is hurting stock prices are rumors or undisclosed information. IR/PR can't touch either. The way the media sits on Apple product announcements is unmatched by any other company.]

2. Stop the Dividend now. It is a complete waste of shareholder/company money. I say screw all these value funds who said they wanted it. You want Apple, but the stock.

[I agree. But it enlarged the shareholder base, and those investors don't trade in and out. It stabilized the stock. God knows how it might have oscillated without them]

3. At this level, stop wasting time. Announce a $50B buyback now. Put your money where your mouth is and where the company is going.

[Buybacks announce you have no new technology to develop or have no acquisition possibilities. Neither are true. I didn't give them money to buy their shares - I gave it to them to make new amazing products]

4. Announce a 20 to 1 stock split and now. Don’t wait. You want to increase shareholder value, watch. Do the split, it doubles in 1 month.

[That I agree with. Not 20:1 - that kind of dilution causes issues in the future. But a 2 for 1 split would let them jump to the NYSE - and would give AMZN a run for investor money]

5. Sign a deal with China Mobile now and take less on the payment.

[Can't do it without repercussions in the USA. They need to make some "value added" deals with China Mobile, like promotional support, or volume discounts that Verizon and AT&T can't match because they have diluted platforms - or maybe splitting the cost of an LTE upgrade that's not compatible outside China. They are very creative - they'll figure it out]

6. Give the 3rd world countries a cheaper Iphone and F the margins. Don’t listen to WS and just do it.

[In the works, I am sure. The just need to protect the iPhone 4/4s sales worldwide, which are very significant. I am sure it's coming, likely in late 2013]

7. Stop giving Apple Management and Board stock options like candy. Align to their performance and stock price. Stock goes up, they get rewared. Stock goes down, they don’t. Stop handing out millions just becuase they stayed on board for 5 years

[A good idea if linked to performance that they can control, LOUSY/UNFAIR if linked to stock price, which is (and should be) beyond their control. I want no part of a company whose board could raise stock price independent of market forces]

JANUARY 22, 2013 2:50 P.M.

Vinny wrote:

Wow, very impressive run up to earnings. Up
$2.00. I'm dizzy. When does this rocket stop? lol

JANUARY 22, 2013 2:55 P.M.

Bill wrote:

@ Mel: I'll five him until Thursday morning
to see if he delivers on any of the items we
mentioned. I'd he gives us 1/2 and has good
earnings and forecasts, stock could see 600
Thursday. If none and earnings and forecasts
miss, Apple goes to 430 Thursday.

JANUARY 22, 2013 3:08 P.M.

Ed wrote:

Got to love it! RIMM up 10% because CEO talks exit plan and they don't make any money! Go RIMM!!!

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.